For retirement investors, dividend ETFs can be a huge blessing

The term “smart-beta” gets thrown around a lot these days as Wall Street begins to move beyond traditional indexing. Most of the funds in the category are kind of junky. However, the FlexShares Quality Dividend ETF (QDF) is one fund retirement investors may actually want to consider.

The heart of smart beta is using additional screens to create and index, and QDF is no different. The ETF first looks at firms with high yields, as well as strong payment- and dividend-growth histories. QDF applies screens to weed out potential problems. By looking at factors such as profitability and reliable cash flows, QDF attempts to rank its holdings based on dividend quality.

QDF’s portfolio of 208 different dividend-paying equities can represent the “cream of the crop” when it comes to safety and dividend payouts. High-yielding stocks with “sketchy” financials — like Frontier Communications (FTR) — won’t be found in QDF. That means it’s perfect for retirement investors worried about where their yield is coming from.